March 16, 2008

The Great Brain Robbery

Joseph Stiglitz and Linda Bilmes have generated a buzz with their new book “The Three Trillion Dollar War: The True Cost of the Iraq Conflict,” where they argue that the all-up cost for the war in Iraq is 60 times greater than the original Bush forecast of $50 billion. A cost of $10,000 for each man, woman and child in America, rather than Bush’s $167. The huge $3 trillion total they calculate has scary implications for the U.S. economy, driving us to—what? Nobody knows.

Meanwhile, what about healthcare? It’s hard to believe, but in both its dollar costs and its human toll on Americans, the healthcare mess is even worse than the war. And all the current presidential candidates deliberately avoid the core of the healthcare problem: the corrosive behavior of the healthcare lobby. Why do we tolerate that behavior? Where are our brains?

Spiraling U.S. healthcare costs now total over $2 trillion per year, 16% of GDP, more than $7,000 per person. Our total public and private per capita healthcare costs are two or more times higher than those of any other industrialized country, who all manage to provide universal healthcare for everyone even though they spend much less than we do. And they achieve much better health outcomes than we do—we rank 37th worldwide.

Private health insurance companies play a big role in U.S. healthcare. They collect insurance premium payments of $950 billion per year, and they want to keep doing so. Of that sum, about 2/3 pays for healthcare actually delivered by providers like physicians and hospitals, and the other 1/3 is what it costs us to keep the healthcos in the system: the slice of premium payments they retain for their own expenses and profits, plus the administrative cost burden they impose on doctors and hospitals for billing and insurance-related functions. For more, see http://www.pnhp.org.

Keeping the healthcos in the system ends up costing us $350 billion per year, over $1,000 for every person in the U.S. More than the current cost of the war in Iraq. And costs for Iraq are expected to decrease, while healthcare costs keep rising.

Now for the key question. Consider carefully:

In exchange for the 1/3 of premiums they cost, what value do the health insurance companies deliver to their policy holders?

Answer: None.

Actually, the “value” they deliver is negative. A healthco’s expenses for sales and marketing and big executive salaries deliver no value to its policy holder/patient, nor do the profits made for its shareholders, but at least all that is neutral. Also neutral is the extra cost the providers incur for coping with the hassles imposed on them by the healthcos. But the healthco’s administrative activities arguably deliver negative value. All that accepting, refusing and rescinding policy applications and approving or denying treatments is certainly expensive, but it delivers only uncertainty and sometimes anguish, even death, to policyholders. At best, they deliver zero value for the 1/3 of premiums they cost.

And that cost could all be saved by going to a single payer healthcare system.

Many experts looking at all this have concluded that the smart thing to do is to switch to tax-supported single payer insurance, greatly improving healthcare results, reining in skyrocketing healthcare costs, and saving $350 billion a year—enough to cover the 46 million currently uninsured in America. But they turn pessimistic when they look at the political landscape, and see the power of the healthco lobby. Naturally, the healthcos want to hang on to that revenue flow of $950 billion per year, so they use their considerable financial clout to oppose any move to single payer. They are now waxing enthusiastic about CDHC, Consumer Driven Health Care, which preserves the health insurance industry by pasting onto the present badly broken system band-aids like tax-sheltered Health Savings Accounts and mandated major medical insurance. Under CDHC, the overall revenues taken in by the healthcos increase significantly.

In their books on our healthcare system, observers Dr. Arnold Relman and Timothy Jost painstakingly dissect CDHC, showing precisely why it won’t solve the problems of the current system. But each then sadly concludes that, because it’s what the healthcos want, CDHC will probably have to play itself out over some ten years before we voters finally give up on it, overcome the powerful healthco lobby, and install what will work: a single payer system like that of HR 676. If we had any brains, we’d move to single payer now, not ten years from now.

Just how much of our money would we be letting the healthcos waste over the next ten years? At least $1,000 per person for ten years, or $10,000 for every man woman and child in the U.S. $3 trillion in total, the same total that Stiglitz and Bilmes calculate as the all-up cost for the war in Iraq. Sums this large threaten the stability of the U.S. economy.

And then there is the human toll— keeping the healthcos in the system is worse than just wasting money, it actually does real harm to many people. It kills some of them. Our broken healthcare system causes 18,000 deaths per year—far exceeding the 4000 deaths we have incurred so far in Iraq.

Remember—that $3 trillion over ten years, all wasted or worse, is for the 1/3 of premium payments the health insurance companies cost us, not the 2/3 spent for actual healthcare. And since the healthcos deliver no value to us in return, we are effectively letting them steal $3 trillion from us. Why are we doing this? Where are our brains? Why don’t we even know what’s going on?

It’s because the healthco lobby doesn’t want us to know about it, and the media collaborates with a veil of silence. Think of it as a very quiet $3 trillion robbery. The Great Brain Robbery. Because first the healthco lobby had to steal our brains, so we wouldn’t notice what’s happening.